Fund snaps up $39m site

Listed property fund manager
Charter Hall Group
has paid more than $39 million for a prime industrial site in Melbourne’s west, in one of the state’s biggest industrial transactions this year.

The 14.51 hectare site in Hoppers Crossing was bought from Cromwell Property Group for $39.35 million, at a yield of more than 8 per cent. It is the fifth asset for Charter Hall Group’s Direct Industrial Fund.

Woolworths occupies the site on a 10-year lease, which is part of their Masters Hardware rollout.

The property, about 25 kilometres south-west of Melbourne CBD, is about 500 metres from the freeway and is near the south-western corner of Forsyth and Old Geelong roads.

It comprises 52,612 sq m of office and warehouse distribution space, with an estimated net income of $3.15 million There is an additional 30,000 sq m of vacant land at the rear of the property, allowing for future expansion. Its weighted average lease expiry is 8.5 years.

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Charter Hall’s joint managing director,
David Harrison
, said the purchase brought their total DIF assets to $155 million within the defined equity raising period. With a target size of $200 million, Charter Hall now has the potential to acquire a sixth asset.

Under their ownership, Cromwell Property invested $8 million in upgrading the property.

Tony Iuliano, Colliers International national director of industrial, negotiated the sale and said the result highlighted Melbourne’s ongoing shortage of prime industrial stock.

Mr Iuliano said about $90 million was transacted in Victoria’s industrial market in the first quarter of this year, thanks to increased freight movements, logistic demands and the A-grade stock shortage.

“Savvy investors are looking to the industrial sector for good buying opportunities in the current market," he said. “Investor demand for industrial assets is on the increase and this is a trend we will see continue throughout the remainder of 2012."

Colliers International has forecast an increase in rental pressures over the next year or two across all markets as land shortages increase.